Norse Atlantic Airways is a long haul low cost carrier that launched in 2022. The airline exclusively flies Boeing 787s, and primarily operates transatlantic flights. Being a profitable low cost long haul carrier can be challenging, especially in highly seasonal markets, like across the Atlantic.
The airline has just reported its financial results for 2023, so I figured it’s a good time to check in how the airline is doing. Unfortunately the answer is “not good,” though I don’t think that will surprise anyone. Nonetheless, executives at the airline remain optimistic.
Norse Atlantic reports 2023 financial results
Norse Atlantic has reported its financial results for 2023:
- The airline had $439 million in revenue, and had a net loss of $169 million; as a point of comparison, in 2022 the airline had $104 million in revenue, and had a net loss of $175 million
- The airline had an average load factor of 74% in 2023, compared to 62% in 2022
- The airline had total revenue per passenger of $387 in 2023, compared to $262 in 2022
- The airline had total cost per air seat kilometer at 6.63 cents in 2023, compared to 9.22 cents in 2022
As you can see, Norse Atlantic saw significant improvements in 2023 compared to 2022. However, even so, a negative margin of 38% is pretty awful.
Despite these results, executives at the airline claim they “now see a clear path to profitability on a year-round basis.” It’s noted how sales to date for the 2024 summer season are up 80% compared to the same period in 2023. Furthermore, charter revenues booked and under negotiation far exceed charter revenues achieved in 2023 (for example, Norse Atlantic will operate a flight between Lagos and London on behalf of Air Peace).
Norse Atlantic executives claim that they’ve learned lessons from 2023 as they plan their summer and winter 2024 schedules. The following are the priorities for the airline:
- Careful route selection
- Capturing unreleased fare potential
- Increasing load factor
- Developing further business opportunities with cargo and charter operations
Furthermore, Norse Atlantic’s plan is to further focus the winter season on pursuing charter opportunities, while operating its own schedule in summer.
Can Norse Atlantic become profitable?
Obviously the situation at Norse Atlantic is improving, which is to say that the numbers look much better for the carrier’s second year of operation than the first year of operation. However, even with those improvements, the airline is still a long ways from being profitable.
Norse Atlantic executives are saying the right things. I mean, some of these points are pretty obvious — hopefully “careful route selection” is always something that airlines do.
But the challenge is that running a long haul low cost carrier in a seasonal market isn’t easy. As many are probably aware, the Norse Atlantic business model isn’t unique.
In 2021, Norwegian discontinued its long haul flights, as the airline was hemorrhaging money on those routes, and was on the verge of liquidation. Yet Norse Atlantic is essentially a reincarnation of Norwegian, with exactly the same aircraft, many of the same executives, and some of the same routes.
It’s easy to make money flying across the Atlantic in summer, since demand is nearly endless. The challenge is what you do for the nine non-peak months of the year, when demand is much more limited.
Yes, trying to lease out aircraft to other airlines makes sense, but the challenge is that the aircraft needs for other airlines largely overlap with when Norse Atlantic wants to operate its own schedule, in summer. There are airlines that are successful wet lease operators, like HiFly. But that’s their focus, rather than it just being a side hustle.
I have a lot of respect for the people at Norse Atlantic, and I know they started the airline with a great cost structure, as they reportedly got amazing deals on the 787 leases, at a time when travel demand was depressed. Even with a good cost structure, it doesn’t change the fact that running a transatlantic low cost carrier is no easy task. Yet somehow it’s an idea that is tried over and over and over again.
Bottom line
Norse Atlantic reported a $169 million loss for its first full year of operation in 2023, on $439 million of revenue. This is a significant improvement over the carrier’s financial results in 2022, though the airline is still far from being profitable.
Executives at the airline claim they see a path to profitability, though I just see Norwegian 2.0. I’m curious how the next year plays out…
What do you make of Norse Atlantic’s prospects?
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